A Republican plan would end the student loan payment pause

On Wednesday, House Republicans in the Committee on Education and the Workforce voted in favor of a resolution to repeal Biden’s plan to forgive up to $20,000 in student debt via the Congressional Review Act (CRA), an oversight tool that allows Congress to reverse recently-enacted regulation.

But the CRA wouldn’t stop there. It would also end the federal student loan payment pause, which has been ongoing for more than three years and was extended as part of the president’s student debt relief plan, and nullify recent reforms made to income-driven repayment (IDR) plans and the Public Service Loan Forgiveness (PSLF) program by the Biden administration.

That would “immediately force tens of millions of borrowers into abrupt and unplanned repayment with devastating effects,” according to a letter to Congressional leadership from 261 organizations that support student loan forgiveness measures. That said, even if it is approved by the House, it is not likely to gain traction in the Democratic-controlled Senate or be signed by the president.

Still, the CRA has raised alarm bells among those who have received forgiveness since Biden took office, as well as student debt relief advocates. The resolution would reject the most recent extension of the federal student loan payment pause, which lengthened the pause from December 31 to the end of June. In doing so, borrowers would need to make payments for the months since December 31.

That would “send retroactive loan bills to millions of people who have already received relief,” says Natalia Abrams, president of the Student Debt Crisis Center, a non-profit advocate for student loan reform and relief.

That could potentially add hundreds or thousands of dollars to balances.

“This would force people to begin their payments as if the rule had not passed,” Rep. Bobby Scott, D-Va., said Wednesday. If the bill passes, “the interest would also be added back to their payments.” According to Scott, the average interest borrowers have saved is about $233 per month.

Implementing the CRA would be murky

It’s not exactly clear what would happen or how the CRA would be implemented, says Michael Brickman, adjunct fellow at the conservative American Enterprise Institute. It would be administratively very difficult to do, given the complexity of loans, interest accrual, affected forgiveness programs, etc.

“If the money has actually gone out, I don’t know that you can claw it back necessarily,” says Brickman. Instead, it would revert the programs to how they previously operated going forward. “It’s not going to make [borrowers] worse off than they were before the rules, but it’s saying, ‘we’re undoing the rules.’”

The rules he’s referring to are a number of changes to the PSLF and IDR programs that have made it easier for borrowers to attain forgiveness under the Biden administration. On Monday, the U.S. Department of Education announced that over 600,000 borrowers have received forgiveness via PSLF in the past 18 months. Some attained forgiveness through the old rules, which Republicans aren’t currently contesting, and some through the new rules implemented by the Biden administration.

Brickman says Republicans believe the programs, including PSLF, were never meant to be as broad as they are now, and that the changes represent a “backdoor” effort by the Biden administration to forgive as much student debt as possible while the widespread loan forgiveness plan hangs in legal limbo.

The Biden administration “would love to see many, if not all, of the loans wiped away by Congress, but Congress has made very clear they won’t do that,” he says. “In a piecemeal way, they’re trying to forgive as many as possible, and that is costing taxpayers an absolutely enormous amount of money.”

Status of widespread student loan forgiveness

This proposed bill is one of the multiple ways Republicans have tried to upend Biden’s forgiveness efforts; his plan for widespread forgiveness was immediately met with multiple legal challenges, and is currently being reviewed by the U.S. Supreme Court. (The decision should be announced by the end of June.)

In addition to the CRA, GOP leaders proposed cutting the forgiveness plan, blocking the new IDR plan, and barring future student debt relief efforts in their debt ceiling proposal. There is also a separate lawsuit from private financial company SoFi to end the student loan payment pause.

And if the Biden administration loses the case, Brickman says it is likely more court challenges will follow.

“That will embolden challenges to the pause and to PSLF, and the biggest one of all, the IDR plan,” he says. The Biden administration has proposed multiple changes to IDR plans that would reduce monthly payments for many borrowers and help them reach forgiveness more easily.